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Mon 31 Aug 2020 04:22 PM

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Shifting trends mean good news for e-commerce

It's no surprise that Covid-19 has provided a huge stimulus to e-commerce and delivery businesses. For the retail and fulfillment industries, though, it means more agility and innovation is needed to keep pace

Shifting trends mean good news for e-commerce

Within a very short span of time, the spread of Covid-19 forced the world to abandon the familiar in favour of less traditional and innovative ways of operation. More than 100 countries were placed in a state of lockdown since the pandemic began; and with restrictions placed on daily life, and many physical stores closing their doors, consumer behaviour took a “virtual” shift almost overnight.

The pandemic changed the e-commerce landscape tremendously, shifting buying habits online and forcing many traditional retail businesses to adapt quickly to survive. Those without an online presence suffered the most, as people were reluctant to shop in physical stores.

This pandemic, then, has been a catalyst for e-commerce. In the Middle East, especially in the GCC, DHL saw a steep growth in cross-border e-commerce volumes, led by Kuwait which topped 246 percent and followed by KSA at 176 percent and Oman at 166 percent.

On the other hand, consumer demand patterns also changed: financial constraints and social shifts have caused many consumers to re-evaluate their spending and shopping priorities. Certain categories, such as the luxury goods sector, have suffered, whilst others, considered more of a necessity during a “stuck at home” situation, have thrived. In the Middle East, DHL saw the fastest moving product categories to be hygiene, self-care, fitness apparel, office equipment and food items.

What does the immediate future look like?

As we look onwards to a post-corona world, many businesses are wondering what the new consumer landscape will look like. Traditional bricks-and-mortar brands are experimenting and restructuring product offerings to meet new consumer demands; whether that means going digital and selling online, exploring the direct-to-consumer (D2C) model, or working creatively to take an experience-based business into people’s homes, one thing is certain, e-commerce is here to stay.

Yet, a key consideration remains: customers will only stay in the long term if their shipping needs are being met. In a recent consumer survey by Global Web Index 2020, 51 percent of consumers said they expected reliable and free delivery to be of more importance to them now than pre-pandemic. Logistics therefore, has a key role to play in customer satisfaction.

The biggest challenge to e-commerce is whether global supply chains, transport and logistics can remain seamless if ports, factories and airports remain closed or not operating at full capacity.

Thankfully, the connectivity of the GCC has mitigated this somewhat, and although passenger travel between some countries was halted, essential commercial cargo and freight was maintained.

Logistics continues to be a necessity, and a vital service provider during such times. The pressing question now is how to anticipate and plan for what consumers will do next to be better able to support e-commerce customers.

What e-tailers need to do

Considering that the way in which companies act or adapt now will have huge ramifications on their future, thinking outside of the proverbial delivery box is crucial to their survival.

We have seen a spike in online shopping for personal goods but also for business, and with more people now working from home we need to make sure we are closer to where our customers are and make ourselves present in areas that are closer to the target locations, which previously may have had less demand.

As airports and borders slowly open up and the situation stabilises, we need to consider not only the shift in the B2C landscape, but its new wave of users.

Our focus should be to re-align our investments to match future trends whilst re-engineering our operations and re-purposing our capabilities to better serve our customers and ensure speedy, seamless delivery is not impacted.

Digitisation for real time visibility, increasing flight frequencies, adding courier and customer service capacity, and innovating last mile delivery methods will become a primary focus for many logistics solutions providers – as will be the increased reliance and usage of our own fleet and analysing spend on partner airlines to reduce cost and asset usage. These are all lessons learnt from navigating through the disruptions to global supply chains, constrained cargo capacity, broken links and transit/delivery delays caused by the lockdowns and closing down of borders.

The effects of the pandemic will be long lived; and while we may never return to a pre-Covid normality, the “new normal” will be an interesting scenario.

One certainty is that e-commerce will only expand further, and as we continue to see a shift in consumer behaviour and buyer habits, many industries, including logistics, will have to prepare for lasting changes and re-evaluate their business and operating models.

Nour Suliman, DHL Express CEO, Middle East & North Africa

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